The Federal Government has announced its decision to downsize the 2020 budget by ₦1.5tn. Yet, there is no public information on the budget items that make up the amount. Though budget cut is a reasonable decision, experts say the government must exercise caution. That the implementation must secure critical sectors such as education and health.
Early into the year, oil trade war as well as the COVID 19 pandemic impacted Nigeria’s oil revenue. As a result, the country experienced a series of economic imbalances. This is due to the distortions in the revenue benchmarks of the government. In response, the government proposed a 20 percent cut on capital expenditure. Also, it proposed a 25 percent cut on recurrent expenditure. Already, there is an approval to slash the budget.
Despite the urgency of an economic realignment, such realignment must meet citizen needs. To achieve this, there is a need to reduce the cost of governance. Moreover, the current cost of governance is considered enormous. Similarly, non-essential expenditure items should be reduced to allow for growth-based capital expenditure.
Where FG Can Get The ₦304 Billion
A DATAPHYTE occasional paper identified how the government can get as much as ₦304bn of the intended ₦1.5 trillion cut. The paper highlighted critical investment the government needs to make notwithstanding. It also listed non-essential items that can be jettisoned. It follows the recommendation of the Organized Private Sector of Nigeria that the budget cut should attempt to deliberately curb waste and institutionalize a roadmap for economic diversification. The paper is due to be sent to the Budget Office and the National Assembly.
The expenditure on non-essential includes local and international training. Others are newspaper, the printing of non-security documents, and subscription to professional bodies. Also and purchase of motor vehicles. Furniture and fittings, and the purchase of land for building new offices. Likewise, anniversaries, celebrations, computer skill acquisition, construction are other avoidable expenditure items. In spite of the budget cut, the paper recommended that health, education, security, infrastructure are priorities.
Collaborative stakeholder contribution to the budget readjustment process is paramount, the paper stressed. This means experts contribution across sectors. With the presidential directive for immediate implementation of the Oronsaye report, accelerated effort to merge the institutions that do not need legislative approval will boost prudent revenue management. Besides, there is a need for immediate economic diversification.